A "grand bargain" that's a bad deal for workers

The Democrats say they staved off cuts during the latest budget battle with Republicans, but austerity has become the new reality, explains Lance Selfa.

March 28, 2013

President Obama with John Boehner

PERHAPS THE best that can be said about Washington's latest budget deal is that the government won't totally "shut down," as feared, during the rest of the current fiscal year. But for thousands of people who depend on government assistance for health or education, the government has already shut down.

With little of the drama and hand-wringing that attended the New Year's Day "fiscal cliff" deal between the White House and Congress, both houses of Congress passed bipartisan resolutions to fund the government through September 30, 2013. The bill landed on President Obama's desk almost a week before Congress's earlier authorization for government spending would have expired.

While some in the Beltway media celebrated this as suggesting the possibility of governance breaking out in Washington, it shouldn't be lost on anyone that the bipartisan votes ratified the "sequester," slashing $85 billion from federal spending, that went into effect March 1.

-- A White House-estimated cut in federal spending on emergency unemployment insurance for the long-term unemployed;

-- The loss in vaccinations for 131,000 children, according to the White House;

-- A decrease of $584 million in funding for education of children with disabilities, along with a decrease in funding for other primary and elementary school programs of up to $713 million. As many as 1.2 million students could bear the brunt of these cuts.

-- Furloughs of thousands of federal workers, effectively cutting their pay and degrading government services;

-- The loss of as many as 2.14 million jobs, according to the conservative George Mason University economist Stephen Fuller. Fuller's figure includes layoffs from cuts to federal contractors plus the knock-on effects of cuts on other sectors that depend on government contractor spending.

-- The closure of more than 100 air traffic control towers nationwide.

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THE SEQUESTER grew out of the rotten deal that ended the White House-Congress standoff over lifting the federal debt ceiling in August 2011. In exchange for getting Congress (specifically, the GOP-controlled House) to allow the federal government to sell bonds to finance its operations, the Obama administration agreed to cut domestic spending on non-military "discretionary" programs by up to $1.5 trillion over the next decade.

Moreover, Obama and congressional leaders would appoint a "super-committee" of congressional and presidential appointees to propose specific cuts for Congress to enact. If the super-committee couldn't come to an agreement, than automatic spending reductions--called "sequestration" in Washington-speak--would go into effect.

These cuts would affect both military and non-military "discretionary" spending--in other words, just about everything the government does besides paying for "entitlement" benefit programs like Social Security, Medicare and Medicaid.

As could be predicted, the super-committee, meeting as it did with an election season getting underway, didn't agree on any proposals. The White House calculated that the pain of sequester cuts--especially the ones targeting the Pentagon--would be so acute that Republicans would work with Obama to undo them. And in the spirit of bipartisan pain avoidance, Obama would get the GOP to agree to raise taxes in exchange for doing away with military spending cuts.

The White House was wrong. After being forced to swallow some minimal tax increases on the rich in the New Year's Day "fiscal cliff" legislation, the Republicans declared that they would not vote for any further tax increases. Obama tried to persuade individual Republicans to vote to end the sequester. Most rebuffed him. The House didn't even vote, and so the automatic spending cuts kicked in.

In an era when military spending is winding down along with the wars in Iraq and Afghanistan, the threat of Pentagon cutbacks wasn't sufficient to prompt Republicans to consider higher taxes to avoid millions in cuts from education, health and other vital services. After all, the Democrats had already handed them bipartisan cover for delivering another dose of austerity for those least likely to be able to absorb it.

Lost in all the hot air around the various budget standoffs is the indisputable truth that the Democrats' fingerprints are all over these disasters. In fact, 173 members of the Democratic caucus, including every member of the Progressive Caucus, voted for the July 2011 Senate-originated bill that introduced the "super-committee" and the sequester.

As Obama critic Glenn Greenwald noted at the time:

Therein lies one of the most enduring attributes of Obama's legacy: in many crucial areas, he has done more to subvert and weaken the left's political agenda than a GOP president could have dreamed of achieving. So potent, so overarching, are tribal loyalties in American politics that partisans will support, or at least tolerate, any and all policies their party's leader endorses--even if those policies are ones they long claimed to loathe.

The liberal blogger Jane Hamsher was even more scathing in her denunciation of progressive "enablers," whose vote for the debt ceiling bill helped to cement austerity for the next decade:

New leadership will not emerge until you make room for them by taking out the old, corrupt order. And that job starts with the enablers. The ones who will be rolling out any minute now to placate liberal outrage and whitewash the piece of shit they voted for...The ones who will wrap themselves in the flag and mewl that they "had to do it for the country."

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THROUGH ALL of the fights over the federal budget, Obama has consistently pledged to seek a "grand bargain" with the GOP, in which he wins Democratic support for cutting Social Security and Medicare in exchange for Republican acquiescence to increased taxes. He was at it again when the GOP stiff-armed him on the sequester.

The Republicans banked the sequester cuts as a down payment on a lower level of government funding through September. They know that they'll have one more crack at forcing more extreme austerity: when the Congress must vote again to lift the federal debt ceiling, expected to be necessary around August.

In August 2011, Obama offered the Republicans unprecedented cuts to Social Security and Medicare. Feeling perhaps that Obama was on his way to being a one-term president, the GOP rejected him. But like the spurned, yet determined, suitor, a re-elected Obama is back to courting the GOP for a "grand bargain."

Prominent Democrats--including the president and House Minority Leader Nancy Pelosi--are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation.

This is even before they've started budget negotiations with Republicans--who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers' "carried interest"), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions...

Social Security and Medicare are the most popular programs ever devised by the federal government, which is why Republicans hate them so much. If average Americans have trusted the Democratic Party to do one thing it has been to guard these programs from the depredations of the GOP.

Putting these two programs "on the table" is also tantamount to accepting the most insidious and dishonest of all Republican claims: That for too long most Americans have been living beyond their means; that we are rapidly approaching a day of reckoning when we can no longer afford these generous "entitlements;" and that prudence and responsibility dictate that we must now begin to live within our means and cut back these projected expenditures, particularly if we are to have any money left to invest in the young and the disadvantaged.

The truth is the opposite: That for three decades the means of most Americans have been stagnant even though the overall economy has more than doubled in size; that because almost all the gains from growth have gone to the top, most Americans haven't been able to save enough for retirement or the rising costs of health care; and that because of this, Social Security and Medicare are barely adequate as is.

Paul Ryan's House Republican budget takes on Medicare, but leaves Social Security alone. Why should Democrats lead the charge on either?

Reich asks the right question, but he doesn't have the right answer. The point isn't just that, as Reich argues, Democrats chase Wall Street money as much as the GOP. It's that they, as American capital's second major party, are committed to carrying out a big-business agenda at the heart of which is austerity that's intended to lower expectations and living standards for the majority of Americans.

This is why Obama keeps coming back to the "grand bargain" and leading Democrats tout their "courage" in tackling the "sacred cows" of Medicare and Social Security. It's why the White House has, for years, seemed oddly passive as the recession has ground down millions of workers who have been out of jobs.

Sure, every few months, Obama talks about infrastructure spending and his "Jobs Act," (remember that?) but never with the passion and persistence he shows for the "grand bargain."

As the sequester cuts take effect, and more workers get pink slips, the recent downward trend in the unemployment rate may reverse. For an economy that had finally showed some signs of life, these job losses will be one more anchor to prolong the barely perceivable "recovery" from the depths of recession.

Perhaps that was destined to happen as national attention turned away from the highly charged election. But if it's true that the public really supports Obama's and the GOP's economic policies equally, perhaps it's because the public can't tell the difference between them.